Investor Column | Co-working and the future of work from anywhere

Working away from the office is an idea as old as work itself. The most recent version of co-working began in the late ‘90’s and early 2000’s in San Francisco. Here in Manatee County one of our first large scale co-working business centers even housed our East County Chamber of Commerce location for multiple years. Due to the pandemic, office co-working was reduced greatly just as doing business in a typical office was reduced greatly. Those changes last year put working from home into the spotlight.

Now we are witnessing businesses attempting to capture the benefits of working remotely this past year and then add office access once again. Those businesses are venturing into new waters with this new hybrid approach to work.

One of the top private co-working business entities worldwide is re-attempting to go public. This time they are attempting to go the route of a SPAC, or blank check company, to go public which bypasses a traditional IPO. SPACs have recently caught the attention of the SEC. The SEC published an investor alert in December of 2020 and another warning to investors on March 10 to proceed with caution when working with a SPAC that has a celebrity endorsement. One of the advisors of this SPAC is a former famous basketball player. Their original failed attempt to IPO was based a lack of profitability, excess valuation, and the unorthodox leadership of the founder of the business. Will investors embrace this company again after a recently failed traditional IPO?

This time around, with a new CEO, that co-working company is trying again with a valuation that is one fifth the value it was given in the fall of 2019. Even though the companies’ losses exceeded $3 billion last year, Covid vaccines and the idea of being profitable this year has generated new interest from different investors.

A competitor to this co-working company that is based outside of the US has positioned its co-working offices in the suburbs instead of in the urban centers. The benefits to a typical worker that was based at home in the past 12 months were no commute, a greater sense of community, and a better work/life balance. The suburbs have received much of the migrations away from cities this past year. Rating agency Fitch believes that there may be structurally lower rent demand in urban city centers going forward. Co-working in cities will always be attractive to younger workers, but the trends are not currently reflective of migration back to urban centers.

To give working away from an office another wrinkle, true remote work may only be a year or two away. This month one of our US based space companies has submitted a report to the FCC that indicates their intention to use their low altitude internet satellite network for mobile internet applications such as for pleasure boats, RVs, and airplanes. 5G and 4G towers are everywhere there is civilization. That is not the case with highs-peed internet access in remote places!

Doing business will always be evolving, but this past year has sped up the technology trends of the last 20 years that allows connectivity and collaboration away from the office. Look for these co-working sites to evolve to include exotic and remote co-working combined with co-living locations to cater to laptop adventurers around the world.

Danny Wood is a principal and founder of SeaCoast Financial Partners. To learn more visit MySeaCoastFinancial.com. The opinions expressed in this material do not necessarily reflect the views of LPL Financial.